Apple's Share Price: Did The News Worm Start To Turn?

A couple of weeks ago I wrote that Apple's future was now being framed in much less flattering terms than it has been over the past five years. I contrasted Eric Jackson’s view (Apple to go to $1650) with Edward A. Zabitsky’s, quoted in the Sunday Telegraph (Apple to drop to $270). Zabitsky's was one of the first times in the iPhone/iPad era that we've seen serious reservations expressed about Apple's business. The process of negative reporting is picking up momentum, even though Apple’s stock has reversed some of its losses.

Business Insider yesterday quoted NYU finance professor Aswath Damodaran as having dumped all of his Apple stock. Damodaran said as much in a Bloomberg interview. “I sold because I'm very uncomfortable with the other people who are holding Apple shares right now. The new investors of Apple scare me. They're momentum investors. They've shifted the game. Once stocks become a momentum play, intrinsic value goes out the window.”

Here on Forbes, Todd Ganos speculates: “We warned about Apple a couple weeks ago. The question is: will what happened to gold also happen to Apple? If yes, it would mean a return to $400 per share.” While Nigam Arora had this to say: “The real reason for the swoon is that the stock is over-owned, sentiment is too bullish, and there are jitters over upcoming earnings.” Meanwhile, the Boston Globe reports, it was analyst Walter Piecyk, moving from buy to hold that broke Apple’s run. Piecyk worried about carriers ending their subsidies of iPhones. And here about the risk to Apple's business model.

Two weeks ago I wrote about the information economy around technology and particularly around Apple:

“It has for the most part been supportive of Apple. In 2008/2009 I watched as the information infrastructure in mobile, at that time dominated by TechCrunch and GigaOm, utterly decimated Nokia’s reputation and its executives’ confidence.

There seemed to be no way Nokia could repair the damage, whatever time or consideration it asked for. Its hugely successful global footprint was totally ignored as its performance in the U.S. market became the only benchmark.”

Of course Apple is a long way off becoming a Nokia. The point I want to draw attention to, though, is that we have a new information infrastructure and its effects give reputation a whole new momentum.

Apple has been a major beneficiary of this new phenomenon around popularity. If you can win popularity, you rise above the noise and become even more popular. Recent studies have shown the best way to get an audience is to write about what other people write about. So in effect if you are a producer in the information market, you tend to write about what people are reading. You flock to hot topics.

If anybody has the research dollars to do the case studies on precisely how this affects corporate reputation and stock prices please get in touch! During its ascent Apple had few dissenting voices against its brand– now we are hearing them several times a day. It’s suddenly something people want to hear and there’s no shortage of providers.

Yet not much has changed in Apple’s business over the past two weeks. What’s changed is the information market around it, with a rash of negative viewpoints finding a channel and getting a hearing. We should be worried about how online information works – not because it is inherently wrong but because it is different.

I used to edit Innovation Management. My book, "The Elastic Enterprise", co-authored with Nick Vitalari and described as a must read for companies that want to succeed in the new era of business - looks at how stellar companies have gone beyond innovation to a new form o...